Punting a turnaround?
Macau gaming revenues look set to go from bad to worse. According to reports in The South China Morning Post yesterday, Beijing is giving its Ministry of Public Security powers to crack down on illegal money laundering through Macau, in what is described as an unprecedented move.
Money laundering through Macau has, it is speculated, been a primary channel through which wealthy Chinese channel money out from the mainland.
The move suggests companies exposed to gambling including Crown (ASX:CWN) and Ainsworth Gaming (ASX:AGI) might well become cheaper before any bounce.
According to The South China Morning Post’s Niall Fraser:
“Macau casinos are going through one of the most significant slumps since the market was liberalised in 2002 and the drop in revenues – linked directly to the anti-corruption drive – has prompted a series of warnings from senior mainland figures that the situation poses a danger not only to the city’s economic future but to the interests of the nation “as a whole”.
“When told of the plan yesterday, a senior casino industry insider told the Post: “This is big. They’re calling it the ‘new normal’ here in Macau. This is direct control over transactions by the Ministry of Public Security. It’s serious and key people are going to be scared.
“Beijing is to launch a major crackdown on the multibillion-dollar flow of illicit funds through Macau casinos in a coordinated security drive that will see the country’s powerful Ministry of Public Security play a leading role.
“According to sources with knowledge of the situation, the new security drive will give the ministry’s Economic Crimes Investigation Bureau electronic access to all transfers through the state-backed China UnionPay bank payment card to identify suspicious transactions.”
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
